Wednesday, April 14, 2010

Modern Monetary Theory: shiny, new and good?

Modern Monetary Theory, or neo-Chartalism, proposes debt-free money creation by fiat. Money is created by the state at no interest, then spent (not lent) into the economy for the funding of projects, with the aim of achieving full employment and maximizing money-demand. Taxation controls inflation.

“Modern chartalism theory states that under a fiat money system, money is created by government deficit spending. Because money is not tied to or backed by a commodity, money can only be created when the government spends money. Government may, or may not, ask for that money back in taxes. The demand to hold and acquire [this] money is driven by taxes levied by the state, taxes that can only be paid in the state issued fiat currency.” Wiki
This blog entry is my initial thoughts on and criticisms of MMT, as well as a consideration of its possible usefulness in transitioning to a resource-based economy. (Thank you Martin for posing the question!)


On the positive side Modern Monetary Theory (hereafter ‘MMT’) treats money as a necessary chimera to be controlled by us for the enabling of economic activity, and not as some Act of God or Nature equipped with magical intrinsic value and oh so handy for controlling wayward, lazy us. There has of course been MMT precedent, at least in nascent form, during the days of Jefferson and Colonial Scrip, and a little later during the revolution when The Continental (the name given the currency) did the impossible and funded US armies against the sovereign. The brave, new, revolutionary recognition was that governments could both lend and spend fiat currency into the economy. The success enjoyed by Pennsylvania with their variant of the colonial scrip system was particularly eye-catching:

“The model that earned the admiration of all was the loan office established in Pennsylvania in 1723. The Pennsylvania plan showed that it was quite possible for the government to issue new money in place of taxes without inflating prices. From 1723 until the French and Indian war in the 1750s, the provincial government collected no taxes at all. [ ... snip ... ] The currency depreciated by 21 percent against English sterling, but Rabushka shows that this was due to external trade relations rather than to changes in the quantity of currency in circulation.” Ellen Brown, Web of Debt, p39

More on currency depreciation later...

MMT focuses on full employment, which, especially in the light of recent research published in “The Spirit Level” by Wilkinson and Pickett, is certainly a noble intention, one in tune with homo sapiens sapiens’ base needs for respect and dignity, though this is a positive fraught with difficulty in my view. But perhaps MMT’s biggest positive is it differs from the current program only a little, which means switching over to MMT would not be very difficult technically. Only the argument need be won, albeit in a world highly suspicious of anything remotely resembling ‘just printing money.’ Perhaps we need only be cooly scientific when appraising the US Fed and other central banks monetizing sovereign debt through quantitive easing to demythologize money a little.

On the negative side are all of the problems money always brings with it. MMT money is, as are all other monies as far as I can tell, logically bound to scarcity, competition, profit maximization, perpetual GDP growth and ever increasing consumption, and most crime. Indeed, MMT is perhaps more attached to increasing consumption than are the more austere gold-backed or commodity/intrinsic-value money theories. And then there’s corruption, which is necessarily engendered by the systemic pressure of success being ‘Having More Money Than The Other Guy.’ No laws in history have ever prevented corruption, so the already very tricky task of printing the correct amounts of debt-free money in relation to money created by private banks, is yet further complicated (how often do government funded projects go over budget, and how water-tight is taxation?). Also, MMT sees debt-money as being self-destroying (see quote directly below) – either the debtor defaults, or the principal is expunged upon final repayment. But as we all know, the interest accrues to the creditor, and that is indeed ‘real’ money. (This is so obvious I wonder if I’m missing something.) As before, money-lenders accrue a larger and larger share of the available pool of money via the sucking up action of interest, once called usury. An MMT government would have to tax lending institutions down to size to prevent this distortion from becoming permanent, while at the same time printing money for the economy and taxing the correct amounts back out to prevent serious inflation/deflation problems from arising. Considering the ever-present power of lobbyists and the imperfection of politicians/humans generally, it is hard to imagine this being durably successful.
“All transactions between agents in the non-government sector net to zero. For every asset [debt-money] created in the non-government sector there is a corresponding liability created $-for-$. No net wealth can be created. It is only through transactions between the government and the non-government sector create [sic] (destroy) net financial assets in the non-government sector.” Bill Mitchell, emphasis added.
To my mind this is flawed reasoning arising (tangentially, though with clear connecting lines) from the terrible difficulties economists have — from Smith through Ricardo and Marx, into the neoclassical school, and now even post-Keynesians — defining value. By my lights, wealth (a form of value) cannot be created by any type of money creation on its own. New ‘wealth’ is assisted/facilitated by many different types of funding, in conjunction with technology. Technological developments are of course the source of all increases of living standards through the ages, bar none. If we travelled back in time and dumped 10 trillion dollars on primitive hunter gatherers, then left them alone with that cash but no know-how, their standard of living would not improve by one bit. Increases in ‘wealth’ (improving living standards) happen on the heels of technological advances (from farming to silicon chips). How new technology comes into being, that is, how it is funded and distributed, is a separate question. Money does not equal wealth. It is confused for wealth because it is such a good technology for enabling economic activity. MMT seems not to see this important distinction, though it is almost there, breathing on the window that looks out on this perspective.
The problem with pure debt-money systems is the ponzi debt-wall eventually encountered. There can never be enough money in the system to pay back the interest, except by extending yet more credit to cover existing obligations. If government issues debt free money that problem is somewhat assuaged, but the jobs, technology and other factors have to be in place in order for this created money to have something positive to do. That is key. Otherwise new money does nothing except inflate prices.
On to full employment. I am a big believer in the Keynesian observation of technological unemployment (MMT being, somewhat ironically in this case, a post-Keynesian baby), so worry that unless coupled with a major effort (very difficult to pull off I’m sure) to reduce the work week, the MMT push for full employment will end up looking something like communism, with increasing numbers employed by the State to do any old thing, so long as they are receiving a wage (which is also happening right now). Even with reductions in the work week, the nature of work is changing so rapidly, the highly skilled might have to pull 120, while the less skilled only work 20 hour weeks. I haven’t seen this issue addressed in MMT debates and writings, and am myself at something of a loss as to how to square this circle. Education will certainly be key, but that takes a lot of time and is also very difficult to get right. It takes almost a generation to equip the young for the future, but things are changing so fast, what we teach today is often useless information a decade later.
“The only sensible reason for accepting the authority of a national government and ceding currency control to such an entity is that it can work for all of us to advance public purpose. In this context, one of the most important elements of public purpose that the state has to maximise is employment. [… snip …] So then the national government has a choice – maintain full employment by ensuring there is no spending gap which means that the necessary deficit is defined by this political goal.” Bill Mitchell, emphasis added.
Fairness is always a priority consideration, no matter the model pedaled. Even the fiercest ‘free’ market liberal would argue that fairness is best served by his model, indeed justifies it, that minimal state intervention is the only guarantee of a fair and efficient distribution of goods and services. The road to hell is paved with good intentions, best to let the market work its magic via competition and equilibrium, and not touch, with well intentioned fingers, the running system. The more we interfere, the further away from efficient equilibrium the market, that beautiful state of nature, lurches. If unemployment rises, it is for good, internal reasons, and the market will adjust back to maximum employment in its own good time. MMT has the type of good intentions that so nettle ‘free’ marketeers, and though I am not a ‘free’ market liberal, good intentions of the full-employment kind worry me. We need in my view, going forward, a new way of earning our sense of self-worth, one that is not related to material success, nor to our wage, nor to our contribution to the economy. As I have pointed out before, economics values air at zero, ditto for important social qualities like trust, compassion, friendship, and a sense of belonging. Economics is, in my opinion, worse than useless at assessing value; its efforts in this area have had a net negative effect on society. We should therefore stop looking to economics’ pained struggle to define value via price and money, and search elsewhere. (The Venus Project would be a good place to start.) Full employment, though well-intentioned, is a dodo. We need a new model.
This full employment/technological unemployment blindspot shows how very mainstream MMT actually is, despite the knee-jerk abhorrence of ‘just printing money’ that still exists in spades in the public imagination. The standard dismissal of the problem of technological development rendering human labour less and less necessary, is that more work is created by the economy as efficiencies increase. This is the ‘lump of labour’ fallacy so often cited in discussions of technological unemployment, but as I have argued before, the real fallacy lies in assuming that the shrinking pool of available human-only work can power the entire economy indefinitely. It is our cultural sense that labour is a yucky effort to be rewarded/motivated by wages, that without labour we become lazy good-for-nothings, that there is no such thing as a free lunch, which taken together prevent us from recognizing labour as merely one manifestation of work itself, and that work can be fun, indeed should be. There will always be work. Exchanging labour for a wage, on the other hand, is a quite recent invention, and hardly a genetic necessity. We’ve been around for a couple of hundred thousand years. For only a fraction of that time have we exchanged our labour for money to survive. Accomplishment, as we all know deep down, is its own reward, as is success. Both phenomena were known to us before we invented money. Strictly speaking we do not therefore need a wage to make this so, or to prove that we have accomplished something, or succeeded at something, or even to get unwanted things done (so many of which can be automated). Society has many ways of bestowing praise and reward aside from remuneration.

In “Debunking Economics”, Steve Keen (who describes himself as almost being a post-Keynesian) points out that the post-Keynesian school has no theory of value. Since MMT is a post-Keynesian creation, and since it intrinsically requires maximum employment, I would say that the labour theory of value is as close to its heart as any other. For the sovereign to print debt-free money into the economy, and thereafter to avoid inflation, there must be corresponding economic activity, aka buying and selling, plenty of goods and services, and people earning money they can spend. If inflation is currency devaluation, and if inflation is in MMT combatted with full employment, then currency value comes from labour. We are back with Karl Marx (and Karl Denninger too, strangely enough — the people one finds in bed together!); ultimately money derives its value from labour, from people doing work which provides them with purchasing power. Of course in this case this is also akin to utility value, since money has to flow to all market participants to keep goods and services moving. Nevertheless labour is an unavoidable component in this system of money flow.

I have saved perhaps the most complicated issue for last. It lies in the area of currency exchange and international trade, hinted at above. Currency depreciation leads of course to price inflation of imported goods. For countries with few natural resources MMT might prove something of a time bomb. If oil were to be priced in a non-dollar currency (not a wild impossibility in the foreseeable future), MMT would be problematic even for the US should the dollar devalue relative to whichever currency, or basket of currencies, oil is to be priced in. And when we transition away from oil, those countries surviving from exporting it will also be in dire straights. I’m not sure if MMT can help here, at least not on the world stage. Saudi Arabia would have to import large amounts of resources, but would have next to nothing to export. I imagine this sort of problem affects many other nations besides. As Colonial Scrip experienced some 300 years ago, funding national projects by printing money to buy the imports necessary for their completion has a negative effect on your currency’s international standing.

The complexities arising from money as commodity and currency fluctuations generally are very difficult for all sovereigns to deal with, no matter how dominant they are on the global stage. For MMT to be worth its salt in practice, wouldn't near-global implementation of it be necessary? Some nations have to be losers in the balance of trade wars, have to be net importers. If they print off their own currency to settle their external trade bill, I cannot see how this would not devalue that currency. It is this aspect of MMT I find most vague and naively hopeful in the theory. Internally, within the domain of the sovereign, MMT seems elegant enough (forgetting problems of corruption and competence for one moment). Worldwide it would be a whole other kettle of fish. Dreams of elegant control and finesse almost always shatter when they meet the hard rocks of an uncaring reality. Nations are not separate systems equipped naturally with everything they need. The fact of widely and randomly scattered resources across the planet we inhabit demands of us international solutions to problems of scarcity and wealth distribution. It is at this international level I expect MMT to experience its greatest difficulties.
An open question: how are pensions managed in MMT?
Preliminary conclusion

MMT recognizes that, crudely speaking, all money is, in the end, somewhat like the money that comes delivered with the board game Monopoly. It’s there to make the game possible. In the beginning the amounts among the participants are equal, but over time the majority become poor, while one becomes rich. Luck, some skill, and the rules of the game, make this happen. In life this happens too, but in the real world, more money can be created, somehow, to cope with more players coming to the board, economic growth, and other variables. Taxation circulates money too, keeping the economy going via government spending and welfare. There is no state in the board game fulfilling this function, keeping the game going, which is how there can be a sole victor. The ultimate question is whether MMT can tune the state’s activities to get the best out of money’s role in society, or if money, as I believe, is in fact a flawed technology in light of other technologies rendering human labour and scarcity slowly redundant.

Will money creation along MMT lines be part of a transition to a resource-based economy. I think so, but in an as yet unseen form — a money fully automated on the supply side, with no interest anywhere, that cannot be treated as a commodity, and that is global.

The current system is an implicit variant of MMT anyway (fiat is a major part of it, and the Fed and Bank of England are bidding, via quantitive easing, at their own auctions). We are also, in my view, already transitioning implicitly, away from scarcity and towards abundance. For me the big question is whether monetary collapse must occur before wide, open recognition of the validity of a post-scarcity, non-monetary society can begin. With peak-oil making the news again, and the usual attendant  reaction of doom and gloom, our cultural inability to contemplate seriously radical alternatives like a RBE, in the face of radical challenges, is the main issue. While we continue to believe there’s only one game in town, we flirt with unnecessary disaster. Hopefully, the good sense inherent in MMT will win the day, and lead to a softening of attitudes to money generally, as part of the softening of cultural loyalty to old platitudes and received wisdoms about value and human nature. To want a system in which we are money’s masters, not its servants, would be quite a victory. The far harder part though would be sustaining an MMT system globally.


David Wozney said...

Re: “... should the dollar devalue ...

If the stated value, of “Federal” Reserve notes, declines enough with respect to copper and nickel, the 1946-2009 U.S. Mint nickels, composed of cupronickel alloy, could become somewhat rare in mass circulation.

The April 13th metal value of these nickels is “$0.0614575” or 122.91% of face value, according to the “United States Circulating Coinage Intrinsic Value Table” available at

Tom Hickey said...

The US, UK, Canada, Australia, etc., are monetarily sovereign countries. Unlike those countries that have foregone monetary sovereignty by joining the EMU or pegging their currencies, all monetarily sovereign countries that are operating under the current nonconvertible flexible rate monetary regime are operating IAW the principles of MMT.

MMT simply describes operational reality based on sectoral balances, national accounts, and stock-flow consistent macro models under the existing fiat system. It is not a theory based on assumptions, like neoliberal economics.

There is no need to "switch" to MMT. We are already there. We can choose politically to acknowledge that this is the reality under which we are operating and act in terms of it, or we can continue to pretend that we are still operating under the convertible fixed rate system of the gold standard for reasons of "fiscal discipline."

If we choose the later, the result is huge opportunity cost due to unnecessary output gaps and the unemployment and other consequences of deficient aggregate demand, when MMT shows instead how to achieve and maintain full capacity utilization, full employment, and price stability through fiscal policy that observes national accounting identities.

See, for example, Bill Mitchell, Deficits are here to stay … get used to it for the sectoral balance approach and Warren Mosler, 7 Deadly Innocent Frauds for a debunking of the myths.

Toby said...

@David: I'm well aware the dollar is losing value. I guess I should have put "further" in there! However, judging the 'value' of a currency against commodities is somewhat redundant, since it assumes true value lies in commodities, that they have intrinsic value. That is not a position I hold.

@Tom: You seem to agree with me on the point I make about the current system being already more or less MMT. By "switch" I meant "make explicit", make stated public policy. The notion of printing money is still quite a delicate topic. Generally speaking, though this is slowly changing, public attitide to all things value and money is many decades out of date. Otherwise you did not offer any commentary on the problem of technological unemployment, nor imported inflation. And it is Bill Mitchell's writing that has informed my blog post here.

Thanks to both of you for commenting!

Tom Hickey said...

Toby, I was not aiming this comment at you directly but clarifying for readers that we are already using a fiat system and that gives us policy options that we are not using presently but could be if the public, media, politicians and so-called experts were aware of operational reality.

As far as imported inflation goes, we need to be explicit about what "inflation" means. Strictly speaking, inflation is a monetary term meaning that money loses value when issued in excess of real output capacity to absorb. That is to say, monetary inflation is caused by creating excessive demand relative to goods and services for sale, through monetary means.

Inflation is also defined as an across the board price increase. This can be caused from the supply side, if supply contracts, for example, as happened initially in the case of both Weimar and Zimbabwe. It can also happen if key commodities rise in price due to cartels, hoarding, etc., as was the case in the Seventies, where the oil crisis sparked by OPEC price increases led to higher prices for all petroleum dependent goods and services, which is just about everything.

I would not call price rises caused by supply factors "inflation" in the same sense as monetary inflation, because it results in confusion. However, supply side price increases often provoke monetary inflation in response, so a symbiotic effect can emerge, and this must be controlled. Generally, supply side problems can be resolved through technological innovation, but this can take time. Government must resist the pressure to inflate monetarily in the mean while.

As far as unemployment resulting for technological innovation goes, this is a good thing because productivity is increasing. The solution is to applaud progress and realize that everyone does not need to work as hard as before. Since more can be produced with less, to keep nominal aggregate demand in line with real output capacity, new ways of distributing money will have to be devised to take advantage of increased opportunity as well as to obviate mass unemployment. This just involves a change of attitude and is relatively simple to solve, especially if approached from the angle of distributive justice.

The biggest problem I see is negative externalities, especially those resulting in environmental pollution and human contributions to climate change. Here market-based solutions lie in the direction of establishing true price.

Toby said...

Thanks for clearing that up Tom.

I think we're in general agreement, and read with particular satisfaction your comments on technological unemployment. I encounter so few people who take it seriously enough, to recognise it as the blessing it could/should be. I hope it becomes increasingly possible, as time goes on, to consider a post-WageForLabour world as a side-debate of the ramifications of MMT generally.

Your comments on price inflation are also interesting and have given me food for further thought.

Tom Hickey said...

Regarding technological innovation and employment, we have already seen a striking example of that in terms of opportunities for women. Previous to modern technology, women were necessarily occupied with domestic (unpaid) employment, which pretty much excluded them from the economy, from the necessity for formal education, and from social, political, and economic power and influence.

Technological innovation freed them from this necessity, and women chose to pursue education and careers, and they eventually came to wield increasing power and influence, although barriers in the form of conventions and institutions persist that limit this. But overall all, it has been a win-win for women and society, other than in the eyes of conservatives who harken back to "the good old days" when people knew their place.

As technological innovation frees more people from the necessity to work as they do now, there will be similar changes in both individual opportunity and social benefits. I hardly expect people to "go to the beach" en masse. Rather, they will find unimagined outlets for creativity. Of course, conservative moralizers won't like it one bit.

Debra said...

Wow... really interesting place I conjured up by clicking on a link in somebody else's saloon.
Over on SuddenDebt, we are having discussions about just why it is extremely important to be aware how much our BELIEFS about what money is, and should be contribute to creating the world we live in, and WILL live in. Belief is an eminently psychological question. To be ignored at our risk and peril.
On the full employment question... I believe that every society arranges for the existence of a proportion of its members that do NOT work.
Because the meaning of the word "work" emanates ALSO from the existence of the idea of "not work".
As I think Toby (?) pointed out in this long, very interesting post, gratuity is essential for us to understand the VALUE of work.
And work WITHOUT remuneration is extremely important in avoiding the disaster that money comes to be the measure of all things (of value) in our society.
I think that in an "ideal" society where current ideas were not hooked up to past ones, technology SHOULD liberate us to be more free in our daily lives. But we are hooked up to the Protestant work ethic still, and it would be dangerous to ignore its effects on us STILL.
Indeed, technology HAS liberated our time. And now... many of us have a hard.. time knowing how to find meaning for our time. (Particulary when we don't have.. money.) Getting up in the morning day in and day out to go to work gives a potent sense of meaning to many of us, or at least keeps us occupied in such a way as we no longer have.. time to ask ourselves questions about the meaning of life.
Women's "liberation" is an extremely complicated issue, much more complicated than what appears here, I believe.
On the interest question..
Yep, I think it would be REALLY interesting having a currency lent without INTEREST.
Big battles were fought in the history of our civilization over the interest question, and for cause.
I'm not competent to say anything else on this blog, but I will try to follow it.
Excellent thinking. (in my opinion...)

Toby said...

Hi Debra, thanks for stopping by with your interesting comments.

I agree, the protestant work ethic is one of the legacy aspects of our paradigm that we have to tackle. Not only would this be essential should we pursue 100% employment, but work itself needs to be understood anew (as do so many other things).

And of course there is no ideal society, but progressing from where we are now does indeed require of us that we take money and its creation head on. Of particular interest to me, as a believer of the direction towards a resource-based economy as proposed by The Venus Project, are money's connections to scarcity, greed, hoarding, social stratification and fraud. Until economics looks at these things, and until the wider public begins to get a deep sense of them, I fear we'll be only treading water, or worse. Open-minded and unbiased discussions are essential.

Debra said...

I have been preaching on SuddenDebt for a while now.
I think that one of the most interesting glimpses into the way money ties into the economy is...
Shakespeare's "Merchant of Venice".
Where you will see that.. money is extremely..secondary in what's going on.
We are talking about giving and receiving. We are talking about the demultiplication of giving in all domains of human society, whether knowledge, or goods, or services are involved.
This MAY sound mystico religious to you, Toby, and it may not.
All of our living religious traditions have realized what makes man tick.
Giving and receiving. WITHOUT "interest".
Now, when we realize what makes man LIVE, we can TRY to take this into account in structuring our (economic) exchanges.
We SHOULD be doing this better in my opinion.

Tom Hickey said...

Here's a short discourse by Meher Baba setting forth a dawning of ideal society along the lines that Debra envisions. It's only a few pages.

The New Humanity

Toby said...

Hi Debra and Tom,

I'm a very spiritual and mystical guy who wants to work out which practical things can be accomplished by humans, at a mass level, to get humanity up out of the current dangerous quagmire and set on a path more appropriate to our circumstances (e.g. technological unemployment and abundance).

In terms of war, competition (which variety?) and poverty, it is the work of Jacque Fresco at The Venus Project which has caught my attention. There are weaknesses and flaws in his proposals, as there always are in such radically new ideas (like transcending the need for money by producing and presuming abundance), but practically speaking this would set up the right conditions for inspiring a far more cooperative, humane and sharing attitude to our life on this planet.

There is always exchange, or giving and receiving, and there will always be media of exchange, such as language or perhaps community, but money is unique among them I think. As best as I have been able to work it out thus far money is logically bound with scarcity (language and community are not). Money is a technology designed to solve the problem of distributing scarce goods and services amongst a large number of people. This tool, which operates in presumed conditions of scarcity, encourages hoarding and competitive behaviours, and has influenced the course of socioeconomic history deeply indeed, such that now we seem to think, culturally speaking, that only profit can properly motivate us, or even that profit and monetary value are the true yardsticks of a thing's worth.

So my enemy on the intellectual level is money itself, until I find a money that can inspire cooperation and sharing. In attacking the presumption of scarcity that underpins money's use we attack the true root causes of war, poverty and crime humanity has struggled with for so long. Should we solve the problem of money we will have a good chance of looking at the more spiritual side of All That Is. Technically we can solve pretty much all material problems: provide us all with water, clean air, good food, shelter, energy, refrigeration, transport and so on. Culturally we seem miles away from recognizing this. In my opinion our efforts should therefore start with money, after which our spirituality can bloom anew.

Tom Hickey said...

Toby, I have thought about this long and deeply, too, beginning with the counterrevolution of the Sixties and Seventies, which was later co-opted. There actually was a spirit of cooperation and sharing back then, and many good ideas and proposals were being put forward and discussed.

Here is the way I came to see it. Social and political change involve economic change, but economics is not fundamental. This was Marx's mistake in reversing the Hegelian view that spirit is foundational. The way Bucky Fuller put it is that metaphysical capital, meaning human consciousness and its products, underlies physical capital and its products. Change lies through changing minds and hearts, as the world's wisdom teachers have proclaimed, rather than altering the economic infrastructure, as Marx mistakenly thought. That's wagging the dog's tail.

Spirituality (in the broad sense) and materiality are not opposed, but two sides of the same coin, since ultimately all is one, and human beings are not separate from Nature. Culture, including social, political, and economic conventions and institutions, are constructs of the human mind. Cognitive science shows how conceptual memes lead to behavioral conventions and conventions coalesce into the institutions of a society. See Douglass C. North, Economics and Cognitive Science. (It's a short paper.)

Money has become a convention through daily use and an institution through finance. MMT shows that it is actually only a useful tool if properly understood, and it can be used to allocate resources so as to ensure national and global prosperity. It is not money that is the problem but the lust for money, as perennial wisdom teaches. Changing the monetary rules of the game will not do away with that lust, as the history of Marx's ideas becoming concretized as Communism shows. Private property was abolished only to be commandeered by self-proclaimed rulers wielding power. The unscrupulous will seize power in any case, if consciousness is not raised.

Bucky Fuller described what is necessary to allocate the world's resources to global prosperity as "raising the general level of education." That is the conclusion that I have arrived at. It's not economics that is failing us but the culture, and culture is an expression of the level of collective consciousness. What needs to be changed is the level of collective consciousness. This involves spiritual regeneration in a broad non-sectarian sense so that true values can replace self-centeredness and self-interest as the dominant organizing force in society.

What is the basis of genuine spirituality? Values like honesty and love. As Augustine said, "Love and do what you will." To the degree that one loves universally, one has the interest of all at heart.

Toby said...

Hi Tom,

thank you for that thoughtful post, which I very much agree with, but with a twist, which won't surprise you at all. The area we most need to educate ourselves on is the way in which money/economics and the entire 'free' market = freedom = democracy meme has come to shape how we value and what we love, though this meme is breaking down, and we are educating ourselves. The Internet is evidence of that.

I take your point that Marx was wrong about economics being the be all and end all, or the ground upon which all else is built. However, there is a thick curtain between us and a new relationship with spirituality and that is the way money is used, and has wormed its way into the very heart of how we organise society. Breaking through this veil requires a lot of self-education and sharing of information.

One of the analogies I got from Bucky Fuller was the effects on behaviour of abundance and scarcity. In "Utopia or Oblivion" he talks of a theater in which the audience sit together and enjoy themselves peacefully until a fire breaks out and smoke robs the room of its good air. In that air-scarcity a very different set of behaviours emerges, where women and children are trampled to death. Spirituality has no chance. The conditions don't allow it. We have to get the conditions right, then the spirituality can flourish.

I happen to believe that consciousness is the ground of being, not economics, nor matter. But we are, at the collective level, still greatly at the mercy of the masters of obfuscation, the high priests of economics, and this power needs to be broken. This blog and others like it are part of that process. Finally, money solves a set of problems which are disappearing. It is therefore becoming mechanically inappropriate, regardless of whether it is 'good' or 'bad'. As technological unemployment bites deeper and deeper, and as our greed fades in recognition of the fact that more and more material possessions do not make us happy, one of two things has to happen. A very new type of money, or a post-money, post-scarcity society, must be constructed. I'm no doom monger, so I think we're going to make it. We are indeed designing our way out of this dead end, and it is exciting to be a part of it.

Debra said...

Today as I was doing my daily walk, I passed by a garden, and a man hailed me.
He asked me if I recognized him, and I truthfully said no. He reminded me that we had met on the bus over the winter (public transport, this is important, NOT A CAR...), and that we had chatted about being able to talk to strangers, to initiate conversation.
Today we chatted for about ten minutes about gardening, nature, nature's time, man's time, etc. At one point, his wife and dog arrived, and he excitedly told me "two years ago you petted that dog on the market..."
I told him that I didn't remember, but that I had a hole in my head anyway, and it wasn't really important.
I asked him.. if he had managed to be able to initiate conversation with people in the bus, and he stopped a moment and thought, and said, yes, he was starting to change that.
And... he told me to come back later, because he wanted to give me a salad from his garden...

I think this little incident illustrates EXACTLY what I'm talking about and how this is all tied up together.
Spirituality IS an economy.
Words, Language IS an economy, or follows economic principles.
This is what Freud discovered.
I think that you are right, and that education is the name of the game.
If you think about it you will realize that of the four major operations, only DIVISION supposes a FIXED pie that HAS TO BE DIVIDED INTO EQUAL PARTS.
If we model our world on a division/divisive paradigm then we will NEVER see abundance.
And we ARE modeling our world on a divisive paradigm.
An economy of abundance is modeled around... multiplication. Why do you think our ancestors were so caught up in... multiply ?
There are different ways to understand multiplication...
Transmission of the kind of knowledge we're talking about is very difficult. I don't think it can be done with a mass education system.
Because spirituality is about the INDIVIDUAL.
How can you have a mass education system that fosters INDIVIDUAL spiritual growth ?
To summarize..
I am currently trying to live as much as possible in the margins of money. Incidentally... this is what Jesus was trying to do, I perceive.
You would be astonished to see how HUNGRY people are to get around money, and not just to keep from paying a buck.
There is real thirst to find something besides money to realize our human exchanges. For gratuity.
The interest problem changed money from being solely a symbol for the value of what was exchanged to an object of value at the same time.
Money became.. even more of an idol than before.
Money as the measure of all things is the Biblical definition of idolatry, by the way. Idolatry of money.
Our ancestors were REALLY savvy on this one.
The second (?) Jewish commandment is against idolatry...

Toby said...

Fascinated post Debra, particularly on division and multiplication. And yes, I agree that a new type of economy, a post-scarcity economy, is the model around which we should begin orienting ourselves. The challenge is enormous, since the very foundations of what we 'know' about ourselves and how to organise society will change. Education is indeed key, even of the institutional kind, since we need a knew model there too, along the lines proposed by John Holt and John Taylor Gatto. We need to teach children how to learn, not what to learn. Teachers have to change from being givers of rote information and brute-power authority figures, to guides and assistants to the pupils emerging curiosity and abilities. Schooling as we know it has to go.

I'm not sure spirituality is economy though. There we need to define our terms. Economics is etymologically about the household and organizing the means of production such that consumption is maximised. Spirituality is something else, to do with understanding All That Is, using whichever tools -- meditation, philosophical inquiry, falsificationism, etc. -- do the job best for each of us.

However, I see that exchange is key in your analogy, and that language is a key tool in exchange. In economics though exchange presupposed private property, which language does not. In conditions of abundance private property becomes unnecessary, and we move to an open access economy. Currently we have production-->consumption-->exchange, in post-scarcity we would have production-->consumption, which is radically different, and very threatening to most people.

The trick is going to be nursing this stuff into broad public awareness without bloodshed and collapse. It isn't going to be easy. There is so much to be unlearned and relearned, and so many people in positions of power who will not give up without a fight. Interesting times...

Debra said...

Some words about who I am, and where I come from.
I am American born, and have lived in France for the past thirty years.
I have an English lit degree from an American college, and trained as a psychoanalyst in France. I have a psychology degree, and spent much time in psychoanalysis before setting up my practice.
I have read a fair amount of Freud. I have read some Lacan, and have the equivalent of a B.A. in linguistics, with emphasis on structural linguistics.
And for many years I have been interested in the Bible, and have read about it, and read it with colleagues.

Most people quote self interest and egotism as being the major problems involved, but my extensive interest in how/what we believe leads me to feel that what is behind our.. inhibitions, should I say, is basically... fear, not self interest.
The self interest propaganda is an example of the expression of our current beliefs about our human nature. We BELIEVE that we are motivated by self interest much more than we REALLY ARE MOTIVATED by self interest. And the expression of this belief is an expression of hopelessness about human nature camouflaged as cynicism.
Changing belief goes way beyond education.
This is one of the major failings of our society at this time : not recognizing that belief cannot be inflected by education, or, at least, not greatly inflected.
The only way to change people's belief is to.. CONVERT them. And you can see that at this time, this is a no no word in our culture.
A long time ago one of my teachers said that the best defense system could not replace an investment.
By the way, I guess I am one of the few people to have waded through Frank Herbert's Dune series to the bitter end.
Frank Herbert was a psychoanalyst..
He also had an excellent grasp on what I'm talking about. He saw it too. His books are not literature, but in terms of political science, and religion, they are required reading for me.

Toby said...

Very interesting Debra, I look forward to getting to know you better! My interest as a very young man was in astrology, which lead me to Jung, from Jung to Freud then back to (via others like Skinner) Jung, but after dabbling with academic psychology became disenchanted and tried to become a normal human in the 'real' world. I am failing at that, and my interest in All That Is has been exploded back into fervent activity by the financial crisis. All that I do here is fuelled by that fervour, and is self-taught. There are therefore bound to be huge holes in my understanding, but because I see this as a global, group process, that's ok. We correct each other as we go.

Fear as (part of ) the base, not self-interest, makes a lot of sense to someone like me. I've recently realised that it makes virtually no sense to call a gene selfish, since it has no sense of self, nor is it capable of making a choice. Selfishness comes from a far higher level than the building blocks of nature, or even of the universe. That entire argument is bogus in my view.

Erata: not production-->consumption-->exchange but of course production-->exchange-->consumption. Silly me!

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